We Will not Allow Anybody to Manipulate This Economy! Says Bank Governor
By Peter Beckley
The newly appointed Bank Governor of the Bank of Sierra Leone (BSL), Professor Kelfala Morana Kallon, has described the present foreign exchange and other issues around financial management in the banking sector as a national responsibility and should be accorded a concerted approach by all well-meaning Sierra Leoneans if they should be addressed.
Speaking to a group of Civil Society activists, including members of the Native Consortium, who had called on him at his Sam Bangura Building office in Freetown to discuss the state of our currency, the dollarization of the economy and the role of the Central Bank, Professor Kallon said that the Central Bank does not operate in isolation and is required to work with other institutions that operate largely on self-interest and not necessarily the national interest.
Professor Kallon said that the Bank has tremendous powers but its leadership is not elected and, therefore, has to be accountable to the people, adding that the greatest responsibility lies with Parliament because it is Parliament that has the power to give and take.
He was however quick to remind the CSO representatives that the Bank is now poised to re-strategise its role and take more decisive actions on issues that have been allowed to be swept under the carpet over the years.
Responding to queries from the civil society actors on the ‘dollarisation’ of the economy, Professor Kallon said that the problems are largely related to traded and non traded goods, the latter being goods and services that do not enter into international trade but are being dollarised, adding that most Sierra Leoneans are forced to offer Leones in exchange for dollars in order to pay for non-traded goods like housing. leading to an increase in the demand for dollars relative to the amount available in the economy. This, he said, causes the Leone to depreciate against the dollar.
He also pointed to the fact that governments in the past have been overspending and forcing the Bank of Sierra Leone to monetise the resultant fiscal deficit.
He said the Banks have also been complicit because they do what he referred to as “Crowding out” the common man as they prefer to lend government because it is willing to pay high interest rates, adding that this creates problems for the Central Bank because it cannot control interest rates of commercial banks if it wants to have control over the money supply.
He said the solution to this will be to encourage government to borrow less, which according to him, will force the commercial banks to look for non-government borrowers, thereby directing their funds to the private sector.
He went further to say that the economy needs a re-invigoration that will take it back to rural development and wealth creation, and reverse the trend of migration from rural to urban areas.
Regarding the weak Leone, he stated that the Leone is weak because we are not exporting as much as we are importing and that it will only get stronger if we are able to reverse this trend.
“Our cash crop market has collapsed. We spend most of our resources in Freetown. Everybody is coming to Freetown and leaving our coffee and cocoa farms unattended to. So, we as a people share some of the blame for the weak Leone,”
Professor Kelfala Morana Kallon, Bank Governor of the Bank of Sierra Leone
On the sale of Dollars on the Street, the Bank Governor said the Bank of Sierra Leone is not opposed to the ‘Dollar Boys’.
“The Bank only wants them to legitimise their operations by obtaining licenses and operating from their registered addresses (not in the streets), as stipulated by laws which have not been implemented over the years.” he said.
He added that when that is achieved,the Bank of Sierra Leone would then turn its attention to those who continue to buy foreign currency from unlicensed forex dealers and those who sell to them.
He said that the Bank will do everything to ensure that ‘dollarisation” becomes a thing of the past. He also promised that in the very near future the Bank would ensure that no contracts are signed in dollars.
On the printing of our currency, the Bank Governor said that the Bank is now in talks with Thomas De La Rue, the company that prints our Leones, and has been even considering other options to see how the costs can be reduced.
“We are a cash society and we have a very small banking population, less than 1 million out of 7 million people. There is lack of institutional trust by people in the banks and people want currency not a bank account.”
This, he noted, must change in order for the financial sector to fully contribute to the nation’s growth and development, adding that the Bank will do everything to promote financial inclusion and the banking habit in the country.
In his conclusion, Professor Kallon said that he is very concerned about the need for a more robust banking supervision regime but gave the assurance that they are doing what they can with the little resources they have and are even planning to increase their banking supervision staff from the present 14 to 50.
He said he is aware some banks have not been supervised for over two years and it’s a situation he would not allow to continue.
Speaking on behalf of the Civil Society representatives present, Executive Director of Native Consortium, Edmond Abu Jnr., made several recommendations, including the introduction of wire transfers, a consultative conference of all players, re-capitalising our community banks, strengthening the informal sector and reducing interests rates, to which the Bank Governor responded positively and promised that they will be strongly looked into.